CHAPTER 6 AGENCY ROLES IN OIL AND GAS DEVELOPMENT ON INDIAN LANDS
| Jurisdiction | United States |
(Nov 2005)
AGENCY ROLES IN OIL AND GAS DEVELOPMENT ON INDIAN LANDS
Office of the Solicitor, U.S. Department of the Interior 1
Washington, D.C.
Stephen L. Simpson is the Assistant Solicitor for Trust Responsibility of the Division of Indian Affairs in the United States Department of the Interior Office of the Solicitor. He has been with Interior for almost seven years, and has handled matters involving environmental defense and policy, Indian minerals, Indian lands and leasing, and the National Environmental Policy Act. Before he came to Interior, Mr. Simpson served for eight years at the United States Department of Energy, where he was responsible for National Environmental Policy Act reviews and guidance for waste projects in the nuclear weapons complex. Mr. Simpson has also spent four years in the private practice of environmental law in Maryland.
He has a bachelor's degree from the College of William and Mary in Early American History, Archaeology, and Material Culture, and a law degree from the Antioch School of Law.
He has spoken at several conferences, including the Special Institute on Federal and Indian Oil and Gas Royalty Valuation and Management IV of the Rocky Mountain Mineral Law Foundation.
He has also received several commendations and awards for his Federal service, including one from the Ute Indian Tribe of the Uintah and Ouray Reservation in Utah, six client-funded awards, and a commendation from the Secretary of Energy.
Indian land is unlike any other land across the United States. This status is a result of laws and legal doctrines dating back to the early existence of the United States (with antecedents even before Independence). The unique status of Indian land also leads to a jurisdictional patchwork unlike any other in this country. This patchwork is especially difficult to understand in the minerals area. This paper is an attempt to lead the reader through the background, current status, and special issues involved in the overlap of Federal, tribal, and, sometimes, even State jurisdiction on Indian land. 2
How did Indian land become different from other land?
From the beginning of this country, Federal law has treated Indian land differently than any other land. Beginning in 1790, Congress enacted a series of laws, under its broad constitutional authority "to regulate commerce . . . with the Indian tribes" 3 that were aimed at controlling trade between Indians and non-Indians and protecting Indian lands from fraudulent purchase or conveyance. 4 One of those laws was the Nonintercourse Act. As currently codified, the Nonintercourse Act provides, in pertinent part:
No purchase, grant, lease or other conveyance of lands, or of any title or claim thereto, from any Indian nation or tribe of Indians, shall be of any validity in law or equity, unless the same be made by treaty or convention entered into pursuant to the Constitution. 5
Even though the United States stopped entering into treaties with Indian tribes in 1871, 6 the Nonintercourse Act still requires that any alienation of Indian land must have the consent of the United States. 7 The Nonintercourse Act's "overriding purpose is the protection of Indian lands," which is achieved by "imposing on the federal government a fiduciary duty to protect those lands." 8 While the particular justifications for the Nonintercourse Act's restraints on the alienation of tribally owned lands have changed over time, the need for such restraints remains:
Today, the statutory restraints on alienation of Indian land insulate Indian lands from the full impact of market forces, preserving the Indian land base for the furtherance of Indian values. If tribal land were not subject to restraints on alienation and tax immunities, market forces and State tax assessors would eventually erode Indian ownership of the reservation. . . . The continued enforcement of federal restrictions, in this view, derives not from a presumed incompetence of the "ward," but from a perceived value in the desirability of a separate Indian culture and polity. 9
Thus, with certain exceptions not relevant here, the leasing or other alienation of tribal land, including that for mineral development, requires the consent of the United States. That consent is now given by Congress or delegated by Congress to the Executive Branch, generally to the Secretary of the Interior. 10
Not all Indian land is tribal land, however. In 1887, in an attempt to break up the tribal system and "civilize" the Indians, Congress passed the General Allotment Act (GAA). 11 Section 1 of the GAA authorizes the President to allot to each Indian residing on a reservation up to 80 acres of agricultural land or 160 acres of grazing land found within the reservation. 12 Section 5 of the Act provides that the United States shall retain title to such allotted lands in trust for the benefit of the allottees. 13
Because of these restrictions on alienation, allotted Indian land can only be leased or otherwise alienated under the same condition as tribal land, i.e., with the consent of the United States, either through direct Congressional action or delegation from Congress to the Executive Branch, again generally the Secretary of the Interior. Thus, with respect to Indian land (and mineral resources), the trust responsibility flows to the Indian landowner, whether that owner is an Indian tribe or the individual Indian owner of allotted land.
Although the Nonintercourse Act and the GAA are the fundamental charters for the restrictions on alienation of Indian land, those statutes do not impose specific trust duties on the United States or the specific conditions (apart from Federal approval) under which the land may be alienated. Instead, they impose what the Supreme Court has called a "bare trust." 14 When Congress creates such a trust, it means simply that States cannot tax the land (with certain exceptions in the minerals context, as discussed infra) and it cannot be alienated without the approval of the United States. 15 Tribes and individual Indians are then free to develop these lands independent of State control or taxation and are assured of preserving their land base. However, the bare trust does not impose specific duties on the United States to manage the land. Instead, Congress enacts legislation that requires the United States to undertake specific management activities.
What is the jurisdiction of Federal agencies over Indian mineral development?
In the minerals context, Congress has passed three major statutes allowing Indian tribes and individual Indians the opportunity to develop the minerals held in trust for them. 16 Two of these, the Indian Mineral Leasing Act of May 11, 1938, 17 (for tribal land) and the Act of March 3, 1909, 18 (for individual land), authorize leasing, but do not impose any trust duties on the Secretary 19 or discuss any jurisdictional responsibilities of various bureaus. The courts have not yet ruled on whether the third statute, the Indian Mineral Development Act of 1982, 20 imposes trust duties on the Secretary, but it, similarly, does not discuss the roles of various bureaus in the administration of Indian Minerals Agreements. The jurisdictional responsibilities of the various bureaus are detailed in other, more generally applicable statutes, or in the regulations promulgated under these, and other, statutes.
The development process of Indian minerals begins with the negotiation of the lease for individual Indian minerals or the Minerals Agreement for tribal minerals. 21 Several Interior bureaus provide assistance in the negotiation process to the Bureau of Indian Affairs (BIA) or the individual Indian mineral owner for his or her minerals or to the tribe for tribal minerals. That assistance is given consistent with the roles and responsibilities of the various bureaus discussed below for administration of the lease or Minerals Agreement, e.g., the Minerals Management Service (MMS) provides advice on royalties. 22 After all parties have agreed to the terms of the lease or the Minerals Agreement, most importantly the Indian mineral owner, and the BIA has conducted any necessary environmental review (often with the assistance of the potential lessee), the lease or Minerals Agreement is approved by the BIA, if it is in the best interest of the Indian mineral owner. The scope of the BIA's review is very broad; under its regulations, the BIA must consider "any relevant factor, including, but not limited to: economic considerations, such as date of lease expiration; probable financial effect on the Indian mineral owner; leasability of land concerned; need for change in the terms of the existing lease; marketability; and potential environmental, social, and cultural effects." 23
In determining the adequacy of the proposed bonus and royalties, the BIA will rely on a mineral appraisal. Such appraisals of Indian minerals are conducted by the Bureau of Land Management (BLM). Recently, however, the Department of the Interior consolidated all of its other appraisal functions in the Office of Appraisal Services in the National Business Center (the Department's central administrative office). As of this writing, it is still unclear whether that Office will be conducting mineral appraisals.
After the lease or Minerals Agreement is approved, the lessee may begin development. The lessee must receive permission to drill on the Indian land from the BLM. The lessee files an Application for Permit to Drill (APD) with the BLM. 24 After coordination with BIA and the tribe, and preparation of any necessary environmental review, BLM decides whether to approve the APD. BLM is also responsible for inspections and enforcement, consistent with its regulations, Onshore Operating Orders, Notices to Lessees, and any stipulations or conditions for surface use requested by the BIA. 25 It is in this...
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